The number one thing to remember about taxes is filing due dates: Corporate Returns are due on March 15 and Partnership Returns are due April 15, while filing extensions for returns are due Sept. 15. Equally as important is to figure out how your business is being taxed.
A Liability Limited Corporation is a non-taxable entity. The IRS would have had to rewrite the IRS Code when LLCs came into existence, so they opted to give LLCs a choice on how they wanted to be taxed within the existing structures. A single-member (owner) LLC is taxed as a sole proprietor and if it is a multi-member then it is a partnership. Either single- or multi-member entities can elect to be taxed as a corporation, and forms must be filed to make the election to be a regular C corporation or an S corporation.
There are definite advantages to each type of structure from a tax perspective. Therefore, you should talk with your CPA before deciding on a particular entity. The most popular taxable entity after the sole proprietor is the S corporation.
As an S corporation, the owner is considered an employee of the business if the owner works in the business. The business is required to pay the owner/employee a reasonable compensation. Therefore, the business should be filing quarterly payroll tax returns and annual W-2 statements. If you are a new business and didn’t pay wages for 2013, then you should definitely consider this for 2014. There is a line on the corporate tax return for officer compensation and if this line is blank then the IRS flags this on the return.
While we are talking about LLCs, owners should be aware there are changes to the State of Florida statutes for LLCs that took effect on Jan. 1. You should discuss with your legal counsel if your operating agreement needs to be changed to conform to the new laws.
Finally, two questions that the IRS specifically asks are, “Did the corporation make payments that require Form 1099 to be filed?” and, “If yes, did the corporation file or will file all required Form 1099?” This question is asked on all business returns — not just for S corporations. Technically, if you answer these questions incorrectly then you could be filing a fraudulent return, which has severe ramifications. The Form 1099 is required to be filed by all businesses and LLCs that pay individuals more than $600 in a calendar year for services performed for the business. You should have prepared these forms already as they are due to be sent to the individuals by Jan. 31 of each year. They are not due to the IRS until Feb. 28.
